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Kansas City Airport Terminal Project Faces Delays, Rising Costs

2019-01-11

Kansas City Star

Jan. 11 --Costs have long since blown past initial estimates, prompting an independent review of the price tag. Its opening is eight months behind schedule and mounting delays drew heated questions from local officials last year.

Sounds like the continuing saga of Kansas City's planned airport terminal, overwhelmingly approved by voters in November 2017 . It's actually about the new international arrivals facility under construction at Seattle-Tacoma International Airport , or Sea-Tac.

The challenges aren't unique to either city. Across the country, airports are a struggle to build.

Layers of local, state and federal regulation, complex public-private financing plans and politics can make it a challenge to get a new terminal or an airport expansion off the ground. Once construction starts, unforeseen issues below ground, like environmental contamination or archaeological artifacts, can slow progress.

"It happens all around the world," John Grant , a senior analyst for air travel firm OAG. He called Kansas City's woes are "consistent with every other airport project" he's seen.

Keith Thompson , a principal at Gensler, an architecture firm that was part of a bid put forward by Jones Lang LaSalle to build the new KCI terminal, said drastic changes in plans and costs are the rule rather than the exception. Earlier in the KCI debate, there was some question whether the city should build a new terminal or renovate two of the existing ones.

"My gut would tell me a third of what comes out of a master plan gets done in the expected timeline," Thompson said.

This is not to excuse the missteps and infighting that have surrounded the KCI project. It is currently stalled while some airlines dig in their heels on the $1.4 billion price tag and all the carriers that serve KCI struggle to come to agreement on how to share operating costs at the terminal.

It's the latest in a series of hiccups Councilwoman Teresa Loar , who represents the Northland district where KCI sits, said have made the process "dreadful." She said the project had been "jinxed from the get-go."

"There was a good way to do it...and we haven't done anything good," Loar said. "I mean, we haven't done anything right."

Late last year, the airlines requested a second analysis to confirm the $1.64 billion price tag. Officials told the City Council Airport Committee Thursday that the airlines were presenting the results of that study, which confirmed the total, to their executive officers.

Aviation Director Pat Klein said five of the eight airlines that serve Kansas City had previously stated if the cost estimate was confirmed, they would be comfortable with the price tag. He said multiple times they were doing their "due diligence."

"But (the airlines) do this all the time, Pat," Loar said. "I don't know why this is such a problem because they're doing renovations and paying for airports every day as far as I know, so I don't know why this is one is so hard."

Kansas City Mayor Sly James appeared frustrated by concerns about the process and said members should take a "chill pill."

"There's nothing that's off track. There's nobody that's afraid this is going to fall through," James said. "The airlines are going forward. They wanted to check the numbers; they checked the numbers."

He said in an interview there was nothing "strange or weird or scary about this process" and called it normal for a project of its size.

"We're not putting a McDonald's at 39th and Main," James said. "This is something that has a ton of moving parts...We've got a ton of moving parts of this thing and they have to all mesh."

A quick look at other airport projects that have had their own share of difficulty:

Seattle

The new international arrivals facility is due at Sea-Tac in May 2020 , assuming the project stays on its revised schedule. That's eight months later than originally planned, according to the Seattle Times . The project's near-$1 billion budget far surpasses an early estimate of $608 million .

"It started out as.... $608 million ," Port of Seattle Commissioner Peter Steinbrueck said in March 2018 meeting. "Then it went to $684 million . And then in August of 2017, $790 million was approved by the commission. And now we're told there's $146 million more to be added to that."

Months later, the cost rose again to $968 million .

Officials attributed the mushrooming expense to a tight construction market that has pushed up labor costs. Improvements in baggage handling capabilities added to the final price. It also took far longer than expected to negotiate a guaranteed maximum price (GMP) for the project, a common contract provision that caps the overall cost.

"I will acknowledge that the GMP has been two months away for two years, and that has probably misled you all as to when it was coming and I deeply regret that, but it appeared to us that it could be done," said Richard Graves , senior director of capital development for the Port of Seattle .

Sea-Tac is also noteworthy because Clark Construction , Edgemoor's parent company--and part of the consortium that will construct the new KCI terminal -- is the project's contractor. Port of Seattle officials have said they have had issues with Clark, including inaccurate cost estimates and failure to keep the design within budget.

Mayor Pro Tem Scott Wagner , who represents the 1st District at-large and is running for mayor, has held Seattle's project up previously as a cautionary tale, pointing to the cost overruns.

"There would be a price, work would go on and then the price would go up and work would continue," Wagner said.

That made him hesitant to trust KCI cost estimates that came from early, limited design work.

In terms of how Kansas City's woes compare to Seattle's , "There's really no way to know at this point until we get some level of stability and understanding of the price," Wagner said.

Greg Colevas , a division president for Clark, said in an interview last year that the original price guarantees price became unsustainable after the discovery that soil at the job site was contaminated by bypolychlorinated biphenyls, or PCBs.

New upgrades to the planned baggage system, requested by the Port of Seattle , along with facial recognition software and an emergency generator system added about $70 million in costs, he said.

The worst seems to be past, however. Agreement on a price ceiling was reached last fall, and crews have made substantial progress. Last month, they placed the final structural beam for the skeleton of the building.

San Diego

Calls for more public transit linking passengers to the airport have waylaid a $3 billion plan to upgrade and expand an aging terminal.

The San Diego County Regional Airport Authority had intended to start the search for a designer in December by issuing a request for qualifications. But Dennis Probst , vice president of development, said that's now expected later this year.

Probst said the authority is all for more transit, but that the the region is years behind the airport in planning.

"The challenge is that the region--the point where the region is with regard to making those decisions--is not as far along as we might like in order to be very definite about our planning," he said.

An environmental study the authority released sparked concern over the new terminal's potential to worsen traffic congestion. Stakeholders, including the Port of San Diego , which overseas shipping, development and environment along the 34-mile bay, also say the report underestimates the true toll the project will take.

"The port is in favor of...upgrade and expansion, but we want it done the right way so other agencies aren't left to fix the problems created by the project, including traffic impacts, lack of transit, growth in greenhouse gas emissions, noise and sea-level rise readiness," the port's acting public information officer, Brianne Page , said in a statement.

The push back put the project between six and 12 months behind, Probst said. But the airport authority is working working more closely with the port and other agencies.

"I think it's fair to say that the tenor is positive and we are starting to see the light at the end of the tunnel, and we don't think it's a train anymore," Probst said.

New Orleans

Kansas City still has a couple hurdles to clear before crews break ground on the proposed single terminal. After that, construction carries its own challenges.

Airport projects can be derailed by any number of site issues from discovery of archeological artifacts to soil contamination or -- in the case of New Orleans -- construction do-overs."

New Orleans' $1 billion , 35-gate terminal was set to open next month. That was before crews discovered a sewer pipeline was sinking into the soft Louisiana soil. But the Times-Picayune reports that the ribbon cutting will have to wait until May--a full year later than the original date.

The $7.5 million fix was hardly a budget buster, but residents will have to wait that much longer for the new terminal.

In a column published in The Atlantic , Christopher Schaberg a professor at Loyola University New Orleans , called it a "world-class airport for the end of the world," and questioned the wisdom of building the facility given the city's risk for climate change-related disasters.

Events

On March 21, 2019, hundreds of your colleagues will gather at Pier Sixty at Chelsea Piers in New York City for ENR's 54th Annual Award of Excellence Black-Tie Gala. Just like past events, in 2019 you will have the opportunity to network with more than 1,000 construction leaders and make critical connections, while joining us to celebrate the Top 25 Newsmakers for their achievements in 2018 and be inspired by the Award of Excellence Winner.